These four paint stocks get upgrades as Investec sees competition easing

Shares of paint companies such as Asian Paints, Berger Paints India, Kansai Nerolac Paints and Indigo Paints will be in focus on Friday, May 8, after brokerage firm Investec turned more constructive on the sector and upgraded its ratings on select players.

Investec upgraded Asian Paints and Berger Paints to 'Hold' from 'Sell', while raising Kansai Nerolac and Indigo Paints to 'Buy' from 'Hold'.

Cos	Rating	TP
Asian Paints	Hold	₹2,750
Berger Paints India	Hold	₹525
Indigo Paints	Buy	₹1,230
Kansai Nerolac Paints	Buy	₹250

The brokerage said its negative stance on the paints sector over the last three years was largely driven by Birla Opus' aggressive expansion, which captured a sizeable portion of incremental industry growth and weighed on sector-wide margins.

However, the brokerage now believes the most intense phase of competition is likely behind the industry.

According to Investec, the incremental market share drag on incumbent players from new entrants is expected to moderate to around 1.5-2%, compared to nearly 3-4% over the last two years.

Birla Opus has already reached an estimated market share of around 8% by Q4FY26, the brokerage noted.

Investec also said that Birla Opus appears to be shifting focus towards reducing losses, evident from the rollback of certain trade schemes, including extra quantity offers, as well as recent price hikes to offset rising raw material costs.

The brokerage said this aligns with the company's target of achieving breakeven by Q4FY27.

For incumbent paint makers, this shift is seen as positive, as it could restore pricing discipline across the industry. Investec said that recent price hikes undertaken by paint companies to offset raw material inflation already indicate improving industry dynamics.

The brokerage has also raised its FY28 estimates and target prices for the sector, citing a better industry structure and improving margin outlook.

On Kansai Nerolac, Investec said the stock's valuation at 24 times its FY28 earnings appears attractive, led by a recovery in auto demand, expansion into newer categories such as construction chemicals, waterproofing and wood finishes, along with continued premiumisation efforts.

For Indigo Paints, the brokerage believes valuations at 22 times its FY28 earnings remain reasonable. It expects the company to outpace larger peers in growth, while maintaining healthy margins and return ratios.

On Thursday, Asian Paints shares ended 0.67% higher at ₹2,536, while Berger Paints rose 2.28% to ₹489.35. Kansai Nerolac gained 5.28% to ₹212.06, and Indigo Paints advanced 2.93% to ₹923.50.